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François Perrot Walter Rha Adrian Wozniakiewicz. Walter Rha , François Perrot, Adrian Wozniakiewicz. Capital City Canberra named capital city in 1908 Population 22 million 60% concentrate in Sydney, Melbourne, Brisbane, Perth and Adelaide. Free-Market Economy High GDP per capita

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Fran ois perrot walter rha adrian wozniakiewicz

François Perrot

Walter Rha

Adrian Wozniakiewicz

Walter Rha, François Perrot, Adrian Wozniakiewicz


Australia

  • Capital City

    • Canberra named capital city in 1908

  • Population

    • 22 million

    • 60% concentrate in Sydney, Melbourne, Brisbane, Perth and Adelaide.

  • Free-Market Economy

    • High GDP per capita

    • Low rate of poverty

  • 13th largest economy in the world

  • Recognized for its human development, quality of life, health care, public education & economic freedom

  • International Presence

    • Member of the UN, G-20, Commonwealth of Nations, OECD, APEC, WTO

  • Industries

    • Agriculture, Dairy, Banking, Mining, Wool & Cotton, Wine, Fisheries

Australia


History

  • The Commonwealth of Australia

    • First discovered by Dutch explorers in 1606

      • North Western Australia

    • Captain James Cook discovers eastern Australia in 1770

      • Establishes a new penal colony for Britain

    • Since the European settlements in the late 18th century

      • Australia experiences significant population growth

      • Victorian Gold Rush 1851-1860’s (population tripled)

      • Convict labor System 1787-1852

    • Continent was set up into parliamentary governing crown colonies

      • Six colonies

        • Western Australia, Northern Territory, South- Australia, Queensland, New South Wales

    • In 1901 the six colonies unite and become the federation Commonwealth of Australia

    • In 1908 Canberra is named the capital city of Australia

      • As a compromise between rivals Melbourne and Sydney

History


Mining

  • Worlds Largest Producer of Leads, Diamonds

  • Uranium

    • Worlds largest Uranium reserves 23%

    • 3rd larges producer

    • Exports valued at $1.1 billion annually

  • Coal

    • Worlds largest net exporter of coal accounting for 29%

    • Dubbed the “Saudi Arabia of Coal!”

  • Bauxite

    • Worlds largest producer of Bauxite 33% of global production

    • Highest grade deposits of Alumina

  • Aluminum

    • 5th largest aluminum producer

  • Zinc

    • Large reserves

  • Nickel

    • Large reserves

Mining


Agriculture fishing

  • Agriculture:

    • 12% share of GDP

    • $155 billion a year industry

    • 134,996 farms covering - 61% of countries landmass

  • Dry-land farming & Irrigation Mix

    • Due to the dry and infertile soil

    • Horticulture & Viticulture

  • Fishing:

    • $2.3 billion a year industry

    • Aqua farming sector

      • Accounts for 32% of the total industry

    • Fish exports roughly $1.84 bullion a year

Agriculture & Fishing


Wool and dairy

  • Wool

    • Export oriented

      • 90% of production is exported

    • Accounts for 9% of world production

    • Market Leader in fine quality wool sector

      • Producing 50% of worlds Merino wool

  • Dairy

    • Fourth most valuable agricultural export

    • $3.4 billion a year industry

    • Employs over 40 000 people

    • 1.6 million cows producing on average 9023 million liters of milk per year

Wool and Dairy


Wine tourism

  • Wine

    • Over 2000 wine companies

    • Employs roughly 31 000 people

    • $2.8 billion industry

    • Exports over 722 million liters a year

    • Tradition

      • Rich tradition of winemaking dating back to 1788

  • Tourism

    • 3.9% of Australia’s GDP

    • $32 billion a year industry

    • 5.7 million visitors in 2010

    • Decline in Tourism between 2001- 2003

      • Due to external events (Ex 9/11, SARS)

Wine & Tourism


Banking stock exchange

  • Banking

    • 2009: Total banking sector assets $2.59 trillion

    • Government regulated

      • Prohibits merger between two major (AUS) banks in order to preserve competitiveness

  • Stock Exchange:

    • 1861 First Exchange – Melbourne

    • ASX (Australian Securities Exchange)

      • Formed in 2006

      • Merger of ASK and Sydney Futures Exchange

    • Diverse international and Domestic Customer base

Banking & Stock Exchange


Economic performance

  • Services: main component of GDP

  • Constant Real GDP growth

    • Doubled in last 20 years

Economic performance


International trade region

International Trade & Region

  • China: Australia’s major business partner

    • Top exporting destination (20%)

    • Top import origin (15%)

  • US: use to be the major one in 2007 with $47bn

  • Regionaltrade

    • Exports: Japan 2nd, India 3rd. East Asia (incl. ASEAN) = 67%

    • Imports: US 2nd, Japan 3rd. East Asia = 52%


No twin deficit

The CAD isgrowingfastbut is of no concern

Fiscal deficitonlyduring the 2008 global crisis

No “twin-deficit”


Foreign direct investment

Stronglygrowing net FDI inflowssince 2000

2010 Dun&Bradstreet top rank fors safe FDI

A.T. Kearney FDI Confidence index: 6th

Miningaccounts for 25% of the FDI inflows

Foreign Direct Investment


Stimulate fdi

  • Government Eliminate distortions:

    • Strong financial and regulatory enforcement

    • Corruption perception index: 8th least corrupted country (=Switzerland)

    • Social context: social security, unemployment benefits, educational

    • Skilled migration program: point based system, adjustable to the needs

  • Macroeconomics stability:

    • RBA stabilizes inflation around 2-3% by keeping interest rates high in “normal” times

  • 2008 Global finance economic crisis:

    • Monetary policy: RBA sharp cut on rates (from 7.5% to 3% in 6 months)

      • Ease financial pressure on indebted households and businesses

      • Stimulate consumption

      • RBA guaranteed bank deposits and wholesale’s funding of Australian banks

    • Fiscal policy:

      • US$8bn stimulus package (1% GDP): pensioners and low-income families (bonuses), housing construction, trainings

      • Feb 2009: US$26bn package for nation-building (education, infrastructure, tax break for SME, $ for workers, farmers, students)

Stimulate FDI


Macroeconomic competitiveness social infrastructure

  • Basic Education: Overview

    • Education is compulsory from 6 to 16 years of age

    • Literacy rate is 99% for men and women

    • Government expenditure on education as a percentage of GDP was 4.8% in 2009

    • Government initiated the Building the Education Revolution (BER) program in 2009

    • BER Proposes to provide infrastructure funding worth $14.7 billion to Australia’s 9,540 schools

Macroeconomic Competitiveness:Social Infrastructure


Macroeconomic competitiveness social infrastructure1

  • Healthcare: Overview

    • In 2009, Healthcare expenditure of Australia stood at around $51.6 billion, representing 5.5% of GDP

      • OECD average of 8.4%

    • 70% of Australia’s healthcare expenditure is funded by the government

MacroEconomic Competitiveness:Social Infrastructure


Macroeconomic competitiveness political infrastructure

  • Legal Landscape: Performance

    • Australia ranks in the 96.7 percentile on the government effectiveness parameter.

      • measures quality of public services, civil service and degree of independence

    • Australia ranks in the 95.2 percentile on the rule of law parameter.

      • measures extent to which agents have confidence in the rules of the society and particularly at the quality of contract enforcement, the police and the courts.

    • Australia ranks in the 96.1 percentile in the control of corruption parameter.

      • measures the extent to which public power is exercised for private gain, especially corruption, as well as the private and elite influence over the state

MacroEconomic Competitiveness:Political Infrastructure


Building the diamond factor conditions

  • Assimilating Foreign Technology:

    • India-Australia Strategic Research Fund in science and technology

    • China-Australia Special Fund for advanced science and technology development.

    • Australia also entered into scientific bilateral collaborations with the US, Canada, South Korea and Japan.

  • Administrative Infrastructure

    • 1st: OECD listed Australia as most open economy

    • 2nd lowest levels of red tape in terms of business procedures

Building the Diamond:Factor Conditions


Building the diamond factor conditions1

  • Improving Efficiencies:

    • The Australian government has funded projects supporting:

      • telecommunication and IT infrastructure

      • broadband services for local and rural areas

      • the development of green telecommunications

      • carbon trading.

    • The government has also been successful in setting up Tele-education in remote areas

Building the Diamond:Factor Conditions


Building the diamond context for firm strategy and rivalry

  • Reducing Impediments to Competition:

    • Australia has transformed itself from an inward-looking, highly protected and regulated economy to anopen and export-oriented economy

    • Australia is a member of various internationalorganizations including:

      • Asia Pacific Economic Cooperation (APEC)

      • ANZ Certa (1983 FTA with New Zealand)

      • Common Wealth Cairns Group

      • International Monetary Fund (IMF)

      • Organization for Economic Co-Operation and Development

Building the Diamond:Context for Firm Strategy and Rivalry


Fran ois perrot walter rha adrian wozniakiewicz

Building the Diamond:Context for Firm Strategy and Rivalry

  • Effective Competition Policy:

    • The Australian government will take measures targeted at promoting competition and cracking down on anticompetitive practices

      • Trade Practices Act (TP Act) 1974 include moves to further defend small business from predatory pricing

  • Effective Intellectual Property Protection Mechanisms:

    • Australian patent law prohibits double patenting.

      • It does not prohibit two patents for the same invention but of differing claim scope.


Market overview

  • Market value

    • The Australian metals & mining industry shrank by 5.6% in 2009 to reach a value of $63,613.2 million.

  • Market value forecast

    • In 2014, the Australian metals & mining industry is forecast to have a value of $96,280.9 million

    • an increase of 51.4% since 2009.

  • Market segmentation

    • Coal is the largest segment of the metals & mining

    • Accounts for 52.9% of the industry's total value.

Market Overview


Mapping the cluster

  • Buyer Power

    • Average buyer is large company > Boosts Power

    • Low level of product differentiation > Boosts Power

    • Large number of customers > Reduces Power

    • Mining necessity for many buyer’s business> Reduces Power

      OVERALL ASSESMENT = MODERATE LEVEL OF POWER

  • Supplier Power

    • Mining companies are vertically integrated> Boosts Power

    • Mining equipment specialized and specific> Reduces Power

    • Availability concerns of future commodities> Boosts Power

      OVERALL ASSESSMENT = MEDIUM - HIGH LEVEL OF POWER

Mapping the Cluster


Mapping the cluster1

  • Threat of New Entrants

    • Very high initial investment costs> Reduces Threat

    • Increasingly stringent environmental regulations

      > Reduces Threat

    • Resource Super Profit Tax > Reduces Threat

    • Criminal Penalties for violating environmental laws> Reduces Threat

      OVERALL ASSESSMENT = WEAK THREAT

Mapping the Cluster

  • Threat of Substitutes

    • No direct substitutes for metals and minerals

      > Reduces Threat

    • Indirect Substitutes require changing technologies

      > Reduces Threat

    • Very High Switching Costs> Reduces Threat

      OVERALL ASSESSMENT = LOW THREAT


Mapping the cluster2

  • Rivalry

    • Scale economies favor large companies

    • Mergers and acquisitions are expected to increase competitiveness> Boosts Rivalry

    • Exit barriers are high thus major players are strongly motivated to remain in industry> Boosts Rivalry

    • Industry margins are susceptible to changes in prices and growth is hard to sustain> Boosts Rivalry

      OVERALL ASSESSMENT = STRONG LEVEL OF RIVALRY

Mapping the Cluster


Key companies

  • BHP Billiton Group

    • BHP Billiton is a diversified natural resources group.

    • The group exports coal, iron ore, copper, nickel, manganese ore, primary aluminums, and manganese and chrome ferroalloys.

    • The group has a global presence with more than 100 operations in 25 countries.

    • Market Capitalization of $249 Billion USD

Key Companies


Mining cluster history of demand

  • History of major mining booms

    • 1850 gold rush

    • Late 19th mineral

    • 1960s mineral & energy boom

    • Late 1970s, early 1980s energy boom

  • Today: commodity boom

    • Strong growth of developing countries: growing demand for commodities

    • Australia: coal, iron & steel, aluminum, copper, etc.

    • Strong world demand: minerals and ores

    • China: top destination for Australia’s exports

    • Growing demand for uranium until January 2011

    • World trend

Mining Cluster: Historyof demand


Mining cluster performance

MiningCluster: performance

  • Employment and Investment

    • World growing demand for metals, previous metals and ore (China, India) – growing investments

    • Growing technology requiring less man-labor

  • Mining booms: investment, value added


Government subsidies

Government subsidies?

  • Subsidies in 2006 (research by Institute for Sustainable Futures for Greenpeace Australia):

    • Electricity: US$ 2bn

    • Transport: US$ 7.5bn

    • Strong Aluminum subsidies too


Comparison with indonesia

Comparison with Indonesia

  • Indonesia has a similar profile in mineral resources: coal, precious metals, uranium, iron, etc.

  • What is different?

    • Barriers to trade, political instability, corruption, lack of financial and regulatory laws enforcement, >750 dialects, thousands of islands

  • Indonesian boat people seeking asylum in Australia


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